Buy Tata Steel; target of 702: Angel Broking

Bangalore: Angel Broking is bullish on Tata Steel and has recommended buy rating on the stock with a target of 702. According to Angel Broking, Corus has signed a MoU with Thailand's Sahaviriya Steel (SSI) to sell its Teesside cast products (TCP) business for $500 million. Angel Broking believes that the deal is a positive development for Tata Steel as the operations at Teesside were unviable after its four key clients walked away from a long-term contract in 2009.
Tata Steel is a diversified steel producer. It has a global presence in 50 markets and manufacturing operations in 26 countries. The Company provides steel for different industries, which include construction, automotive, aerospace, consumer goods, materials handling, energy and power, rail, engineering, shipbuilding, packaging, and security and defense. Tata Steel manufactures and processes steel, which includes hot-rolled coil through to high-gloss, pre-painted perforated blanks, wire rod and wire, sections, plate, bearings and tubes. Tata Steel provides a range of products and infrastructure services to the international railway industry, which include rail section sizes, steel sleeper products and other specialized track components. The Company's operations relate to manufacture of Steel. Its other business segments consist of tubes, bearings, refractories, pigments, port operations, town services and investment activities.
Angel Broking says, at the current market price, Tata Steel is trading at 5.8x FY2011E and 5.1x FY2012E EV/EBITDA. With the recommended price of 702, if the stock is bought at Monday's closing price of 527.95, the percentage of gain would be 24.8 percent.